News

Retirement, Superannuation

QROPS reporting a wind-up issue

QROPS SMSFs

Specific circumstances must be taken into account when looking to wind up an SMSF with retirement savings balances transferred from the UK.

A specialist practitioner has warned SMSFs with retirement savings transferred from the United Kingdom under the Qualifying Recognised Overseas Pension Scheme (QROPS) rules must take into account unique considerations when considering a fund wind-up.

“If you’re looking to wind up a self-managed super fund that has brought money in from the UK, [you need to consider] what ongoing reporting obligations have you got or what rollover obligations have you got,” SuperGuardian education manager Tim Miller told attendees at a recent technical webinar.

To this end, QROPS carry a 10-year reporting period back to the UK and any balance from an overseas pension transfer such as this in an SMSF may need to be transferred to another fund that qualifies under the QROPS rules, Miller said.

“[Also] you need to make sure that you’re not imposing international tax penalties on people by [deciding] having this SMSF is all too hard,” he added.

He reiterated the strict rules associated with QROPS may make winding up an SMSF an impractical solution.

“The reality is that in almost 99 per cent of the cases, and [you can] probably push that up to 99.9 per cent, you can only roll [the balance] from one SMSF to another SMSF if it’s going to be a purely QROPS situation,” he noted.

“So that’s definitely one to be mindful of.”

Further, he took the opportunity to point out having a retirement savings balance transferred from the UK has further complications for an SMSF and the related wind-up procedures as it cannot be assumed these amounts will housed in a pension account straightaway.

“Given that the UK is not transferring money across until somebody has hit age 55, but [seeing] we’ve got 58 [years of age], 59 [years of age], and we’re getting closer to 60 [years of age as] being the trigger for preservation and accessing superannuation [means] you’ve potentially got a five-year gap between money coming over from the UK and then money going into a pension here in Australia,” he noted.

Copyright © SMS Magazine 2022

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital